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Investing.com– Australian lithium miner Azure Minerals Ltd (ASX:) said on Thursday that it had entered a binding agreement to be bought out by Sociedad Quimica y Minera de Chile (SN:) (SQM)- the world’s largest lithium producer.
Azure entered the agreement with an Australian unit of SQM for a cash amount of A$3.52 per Azure share, valuing the firm at an equity value of A$1.63 billion ($1 billion). The deal also represents a 44.3% premium to Azure’s last closing price of A$2.44. Azure shares were suspended since October 23 pending an announcement on the SQM deal.
Azure’s board said it unanimously supports the transaction, and recommended that shareholders vote in its favor.
The deal comes amid increasing interest in Australia’s lithium industry, as global demand for the metal heats up with the rising popularity of electric vehicles. Lithium is a key component in the batteries used in EVs.
Azure controls a 60% stake in the Andover Lithium project in West Pilbara, which the firm says has the potential to be among the biggest lithium projects in the world.
“Whilst we firmly believe that Andover has the potential to be a major lithium project, there is significant time, cost and risk associated with developing a project of this scale… the Board believes that the Transaction provides Azure shareholders with a compelling opportunity to de-risk their investment,” Azure Managing Director Tony Rovira said in a statement.
The transaction is still contingent on SQM obtaining approval from Australia’s Foreign Investment Review Board, as well as a favorable shareholder vote. Azure said one of its biggest shareholders, Germany’s Delphi Group, has agreed to vote in favor of the SQM deal.
Azure had previously rejected a takeover bid from SQM that valued the firm at A$901 million.
SQM is also partnering with Australian conglomerate Wesfarmers Ltd (ASX:) to build a A$1.9 billion lithium hydroxide project in Western Australia. The Chilean firm had earlier this year bought a 19.9% stake in Azure.
This story originally appeared on Investing
